Slashdot Mirror
Uber Plans To Kill Surge Pricing With Machine Learning (npr.org)
An anonymous reader writes: Surge pricing is a familiar term for any regular Uber rider -- or driver. It's when you call an Uber, and the price of a ride is two, three, or four times more as a result of greater demand brought on by a sporting event or weather event nearby. For riders, it's an annoyance, but for drivers, it's a perk as it usually results in more pocket change. Inside Uber, surge pricing is considered a market failure, and a problem to be solved. "That's where machine learning comes in. That's where the next generation comes in," says Jeff Schneider, engineering lead at Uber Advanced Technologies Center. "Because now we can look at all this data, and we can start to make predictions." Everyone knows that when a Beyonce concert ends, for example, there's going to be a lot of demand for Uber drivers. Schneider explains, "[What's harder] is to find those Tuesday nights when it's not even raining and for some reason there's demand -- and to know that's coming. That's machine learning." With enough of the right data inputs, computer algorithms can do the research that Uber drivers already do -- only better, "so the surge pricing never even has to happen," Schneider says.
I've heard a few drivers say that surge pricing is a massive pain because they only make real money when they are out during certain times, when the whole point of Uber is to be flexible for drivers.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
In the perfect market, the price is determined by supply and demand. If the demand raises and the supply stays the same, the price raises. So if you believe the price is too high, just raise the supply as well. Banning price surges just adds imperfections into the market.
Uber circumvents laws to protect passenger safety. They pay lousy wages while slacking on insurance. They don't do appropriate background checks as evidenced by the Kalamazoo shootings. Why should Uber exist at all? They have no interest in protecting either consumers or employees.
I'll get modded to -1 for asking this question so people can pretend it doesn't exist. Those who do answer will attack me and say this is flamebait or trolling. It will be done to evade the question and discredit legitimate problems with Uber.
Can anyone justify Uber's existence? I expect the answer is no.
Uber will become a market failure when Uber no longer has any drivers because Lyft still has tried and true time tested and sane cost structures that pay it's drivers better.
Honey... There's an Uber driver out here who says you're delivering a baby?
That can't be true, my water hasn't even broooooOMG!!!!
Is this fancy machine Learning going to be out driving Uber cars at peak periods? Or is it simply going to send messages to drivers in a particular area saying "Get your butt out there .. or else" ??
I am Slashdot. Are you Slashdot as well?
Schneider explains, "[What's harder] is to find those Tuesday nights when it's not even raining and for some reason there's demand -- and to know that's coming. That's machine learning
That's not how it works. That's not how any of that works!
Deus! Stop your bullshit marketing and get back into whatever festering hole you crawled out of you twit!
It seems to me that surge pricing isn't a market failure at all. It's how the market gets more drivers on the road when they're needed. I suppose that with good predictive capabilities Uber might be able to get the drivers out slightly before the surge hits, rather than immediately after, and that in turn could reduce the level of far increases needed. But I think it will always be necessary to surge pricing during periods of high demand in order to ensure that enough drivers are on the road.
Otherwise you end up with the taxi problem, that there are never any taxis available when you (and many other people) need one the most.
What is a deficiency in the system, IMO, is that Uber has to set the surge prices. I'd prefer a real-time auction setup, where each driver indicates the rate they need and the max distance they'll travel for a fare, and phone app shows the rider a ranked listing of rides they could get, with an estimated arrival time and cost for each. Then rider and driver effectively negotiate the pricing and Uber just provides the connection between them.
Will knowing ahead of time that there is going to be more demand than usual allow Uber to make more drivers? Doesn't that take at least 16 years? I doubt their prediction is going to be that good.
.... he or she should be entitled to charge as much or as little as they want, whenever they want. Uber's price can and should always be fixed, but drivers should feel free to raise their prices to correspond with demand. If they price themselves too high, then they won't get fares at all. Anything that the driver collects over Uber's price should count as income for the driver.
File under 'M' for 'Manic ranting'
Surge pricing isn't a market failure it's a feature of free markets. It's supply and demand at work. Take News Years Eve? As a driver do you want to A: Drive drunks around town for what you are normally paid? B: Go out with friends or maybe even that sexy neighbor?? Then realize there are way more people then normal wanting a ride. How is Uber going to get drivers on the streets rather then at home?? Fire them if they don't drive New Years like cab company?
Pretty sure Wall Street (one of the lowest friction markets) has never figured out a way to deal with surge pricing. If more people want something then the available supply at the time at that price, What happens?? On of two things. A: Price Goes Up which tends to create more supply. Aka, Uber drivers plan their days around surge pricing which should also reduce predictable Surges pricing. B: Price stays the same. supply is the same and unlucky people get nothing. Some random or early people will get picked up by Uber and the rest will be left wanting.
Best Uber could do would be to tell Drivers of potential surge events in-advance which would allow them a better opportunity to show up for this events thus lowering the surge or in some cases eliminating. They could also tell the passengers of the potential for surge pricing which would allow them to make other arrangements or group together, etc. Uber could also offer Surge Alerts to it's non-logged in drivers near the Surge. They need to account for drivers getting enough time off however or risk lawsuits.
I don't see how they can predict they will need additional drivers on May 17, 2016 in the Kalamazoo area. What if they predict it and it tuns out wrong, so now a driver has time to go around and start shooting people at Cracker Barrel?
If you could predict this you'd be able to own the entire human resources industry.
Machine learning is the new magic!
If Uber knows a big surge is coming, it can promise drivers 2x the pay to be at a certain area at a certain day/time - when otherwise it would have been 5x or more. So the prediction serves to dampen surge pricing, but there has to remain some incentive to pull more than the normal number drivers to a location...
On the other hand, that's only true as long as Uber does not have a fleet of self driving cars. Then they can use the fleet to entirely remove surge pricing if they have enough vehicles to meet demand.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
This entire post should be quoted; it was broadcast on the radio today verbatim. The only novelty here is the insertion of hyperlinks.
I have no idea why people are so excited about this crap.
Of course it is more efficient than taxi because taxis need to follow more regulations.
It's an inferior service as many other consequencea of so called technological progress: faucets in the public bathrooms with fixed temperature and wild temper, pauper bags one has to bring into the grocery store and raggedy army of questionable and unpredictable quality rides.
Ah, forgot. Phones without buttons.
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
isn't this just attempt to reinvent taxi with maximum fare rate set by goverment/taxi drivers/owners...
so it didnt last even decade when uber-needed to start looking answers from similiar systems it claimed to oppose.
hooray free market's too bad they seem to be little bit utopian
Schneider: And so the idea is if you can predict that demand, you get that information out there – and you get that supply there ready for the demand so the surge pricing never even has to happen. And I think that's one of the really cool things that machine learning's doing for Uber right now.
Supposedly surge pricing is supposed to get more drivers go out on the road because they earn a premium.
Just predicting that you'll need more drivers doesn't actually put those drivers on the road, you'll still need some kind of extra incentive.
You might get away with a smaller surge, but predictions alone doesn't solve the problem that surge pricing was made to solve.
I stole this Sig
Why not just follow people to determine where they are by logging phone data?
and know the future and have a perfect unassailable business model and if the world disappoints me i'll sue
As an Uber driver in SF my experience with surge is that it is predicting demand not reporting actual demand and supply. Surge is an attempt to game drivers and markets to build out Uber's proprietary data set.
Yes, of course, Uber consider the mechanism by which they make more money to be a "failure".
Uber: "We really don't like charging people ten times more than last time they used a service so we've got TOP MEN on the problem to fix it."
User: "Top men?"
Uber: "A computer that will work it all out for us, just like the one we have now, but this one will work differently and fix it."
User: "It's going to keep charging everyone more, isn't it?"
Uber: "Yes."
If they want to do away with surge pricing, how about charging the same price at all times? Surge pricing is just them being greedy and raising the price when they know they can get more. It cost Uber the same per ride no matter the time of day or demand.
--- Keep the choice with the user..
Some call it supply and demand. Others call it surge pricing. I call it gouging. I call it taking advantage.
Imagine if everybody practiced surge pricing. Since more people shop for groceries on weekends, when they are not working, Safeway and Kroeger raise their prices for the 'surge'. Did it cost Safeway more for that can of beans they just sold you?
Hurricane coming? The price of food and water just went up as desperate folks stream in to buy food and water.
Outbreak of the flu? Price just went up on flu shots at the doctors office. Supply and demand folks, just shut up and pay.
And you cannot budget your night out when that $10 ride you took to get to the theater is now $15 and you don't have enough because you over tipped the waiter.
I am reminded of a joke I once saw about buying paint from an airline.
Buying Paint from a Hardware Store:
Customer: Hi. How much is your paint?
Clerk: We have regular quality for $12 a gallon and premium for $18. How many gallons would you like?
Customer: Five gallons of regular quality, please.
Clerk: Great. That will be $60 plus tax.
Buying Paint from an Airline:
Customer: Hi, how much is your paint?
Clerk: Well, sir, that all depends.
Customer: Depends on what?
Clerk: Actually, a lot of things.
Customer: How about giving me an average price?
Clerk: Wow, that's too hard a question. The lowest price is $9 a gallon, and we have 150 different prices up to $200 a gallon.
Customer: What's the difference in the paint?
Clerk: Oh, there isn't any difference; it's all the same paint.
Customer: Well, then, I'd like some of that $9 paint.
Clerk: Well, first I need to ask you a few questions. When do you intend to use it?
Customer: I want to paint tomorrow, on my day off.
Clerk: Sir, the paint for tomorrow is the $200 paint.
Customer: What? When would I have to paint in order to get the $9 version?
Clerk: That would be in three weeks, but you will also have to agree to start painting before Friday of that week and continue painting until at least Sunday.
Customer: You've got to be kidding!
Clerk: Sir, we don't kid around here. Of course, I'll have to check to see if we have any of that paint available before I can sell it to you.
Customer: What do you mean check to see if you can sell it to me? You have shelves full of that stuff; I can see it right there.
Clerk: Just because you can see it doesn't mean that we have it. It may be the same paint, but we sell only a certain number of gallons on any given weekend. Oh, and by the way, the price just went to $12.
Customer: You mean the price went up while we were talking!
Clerk: Yes, sir. You see, we change prices and rules thousands of times a day, and since you haven't actually walked out of the store with your paint yet, we just decided to change. Unless you want the same thing to happen again, I would suggest that you get on with your purchase. How many gallons do you want?
Customer: I don't know exactly. Maybe five gallons. Maybe I should buy six gallons just to make sure I have enough.
Clerk: Oh, no, sir, you can't do that. If you buy the paint and then don't use it, you will be liable for penalties and possible confiscation of the paint you already have.
Customer: What?
Clerk: That's right. We can sell you enough paint to do your kitchen, bathroom, hall and north bedroom, but if you stop painting before you do the bedroom, you will be in violation of our tariffs.
Customer: But what does it matter to you whether I use all the paint? I already paid you for it!
Clerk: Sir, there's no point in getting upset; that's just the way it is. We make plans based upon the idea that you will use all the paint, and when you don't, it just causes us all sorts of problems.
Customer: This is crazy! I suppose something terrible will happen if I don't keep painting until after Saturday night!
Clerk: Yes, sir, it will.
Customer: Well, that does it! I'm going somewhere else to buy my paint.
Clerk: That won't do you any good, sir. We all have the same rules. Thanks for painting with our airline.
Same as charging more for gas or electric in the winter, even though it's not more costly to produce at that time. Price gouging has always been unethical, and a stupid idea besides.